TNAG-2238-FCO40-3217-Future-of-Hong-Kong-Royal-Navy-presence-1991 — Page 92

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FM FCO

TO ROUTINE HONG KONG

TELNO 332

OF 18103OZ FEBRUARY 91

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MDLOAN 2288

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PERSONAL FOR GOVERNOR FROM PAUL, HKD

YOUR TELNOS 386 AND 412: HONG KONG PATROL CRAFT

YOU MIGHT APPRECIATE AN ACCOUNT OF WHAT WE HAVE DONE SO FAR TO TRY TO BREAK THE CURRENT DEADLOCK WITH THE MOD OVER THE FINANCING OF THE PATROL CRAFT.

1.

2.

THE PUS CALLED ON SIR MICHAEL QUINLAN ON 11 FEBRUARY. HE EXPRESSED CONCERN THAT THE MOD'S POSITION, AS SET OUT IN SIR M QUINLAN'S LATEST LETTER TO YOU, LEAVES VERY LITTLE SCOPE FOR COMPROMISE. HE STRESSED IN PARTICULAR THE WIDER STRATEGIC ISSUES AT STAKE, AND THE MAJOR POLITICAL EFFORT YOU HAD MADE TO SECURE THE VOLUNTARY CONTRIBUTION OF PDS STG 15 MILLION TO OUR GULF WAR EFFORT. HE DESCRIBED YOUR EFFORTS TO FIND WAYS TO ACCOMODATE MOD'S FINANCIAL CONCERNS AND EXPLAINED THE VERY STRONG LOCAL POLITICAL REASONS FOR NOT WANTING TO RE-OPEN THE DCA.

IN THE COURSE OF THE DISCUSSION, SIR M QUINLAN MADE THE FOLLOWING POINTS:

3.

(A) HE UNDERSTOOD THE POLITICAL AND STRATEGIC CONSIDERATIONS, BUT EMPHASISED THAT MOD MINISTERS AND THE MILITARY STAFF TOOK A VERY HARD LINE ON THE SUBJECT INDEED MUCH HARDER THAN HE WAS INCLINED TO TAKE HIMSELF.

(B) HE ACKNOWLEDGED THAT YOU HAVE PUT FORWARD A POSSIBLE COMPROMISE OVER THE TIMING OF PAYMENTS, BUT HAD DESCRIBED IN HIS OWN LETTER WHY THIS WOULD NOT BE ENOUGH. IN THE COURSE OF FURTHER DISCUSSION HOWEVER, HE AGREED TO HAVE A LOOK AT THIS.

(C) HE ACKNOWLEDGED THAT YOUR CONTRIBUTION OF PDS STG 15 MILLION FOR BURDEN SHARING MATCHED THE COST TO THE MOD FOR THE NAVAL PATROL CRAFT OVER 5 YEARS, BUT POINTED OUT THAT THE BURDEN SHARING CONTRIBUTION WENT STRAIGHT TO THE TREASURY AND WOULD HAVE NO EFFECT ON THE DEFENCE BUDGET FOR THIS YEAR.

(D) HE MADE IT CLEAR THAT THE MOD REMAIN SCEPTICAL ABOUT THE EXTENT TO WHICH YOU COULD NOT FIND SOME WAY ROUND THE FINANCIAL PROBLEMS WITHOUT GOING BACK TO THE LEGCO FINANCE COMMITTEE.

4. LORD CAITHNESS SUBSEQUENTLY SPOKE TO MR HAMILTON ON

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